Tesla boss Elon Musk surpassed even his own lofty standards of both hubris and humility on Wednesday, as he looked ahead to a day when the electric carmaker will be worth more than Apple — but also admitted he had confused his customers with a bad product-naming decision.
“I want to preface this by saying I could be delusional,” Mr Musk told Wall Street analysts on his company’s latest quarterly earnings call. He went on to say that he could see “a clear path” to Tesla, which is currently worth $51bn, topping the iPhone maker, worth $776bn.
His comments came as Tesla is on the brink of launching the Model 3, a new vehicle that is designed to fulfil Mr Musk’s ambition, when he first invested in the carmaker 13 years ago, of bringing electric vehicles to the mass market.
The costs of preparing for the Model 3 left Tesla nursing a bigger than expected loss for the first quarter of this year. A 32 per cent jump in operating expenses, in a period when revenues increased only 18 per cent, left it with a pro-forma loss of $1.33 a share. That was an improvement from the $1.46 a share loss of the year before, but significantly worse than the 81 cents a share loss most analysts had been expecting.
The news shaved more than 2 per cent off its share price in after-market trading, though Tesla’s stock is still up more than 70 per cent since late last year on a wave of euphoria about the prospects for the Model 3.
In a moment of humility, Mr Musk admitted that the name he had picked for the new vehicle had caused confusion, casting a cloud over its existing Model S. He had first wanted to call it the Model E so that, along with the two existing models, it would have spelt out SEX. After a complaint from Ford, which already has a Model E, the name was changed to the 3, signalling that it represented Tesla’s third new car platform.
“I thought we were being clever calling it the 3,” the Tesla CEO said on Wednesday. But instead, he said, customers had assumed the name meant that the car would be the third version of the Model S, making them less likely to buy the existing vehicle.
There had already been worries that the new car, expected to carry a starting price of $35,000, would cannibalise sales of the S, which costs nearly twice as much. Tesla has claimed the handling and much of the technology in the 3 will match the more expensive vehicle.
“We have seen some impact on model S orders as a function of people being confused,” Mr Musk said, adding that he took “full responsibility in naming something that would cause confusion in the marketplace.” An attempt begun a month ago to educate customers about the difference in the cars had not yet had an effect, though the Tesla boss said the company would keep trying to communicate the differences.
Explaining why he believed Tesla would one day be worth more than Apple, currently the world’s most valuable company, Mr Musk said that the company was developing an automated manufacturing process that would put it ahead of other carmakers.
In particular, the company is “getting good at building the machine that builds the machine,” he said. “The programming of the robots and how they interact is far more complex than the software in the car. I think this is going to be a very difficult thing for other manufacturers to copy. I wouldn’t want to be in their position.”
Despite Mr Musk’s comments, Tesla has often failed to live up to its own high production goals. It struggled to overcome production glitches with the Model X and is now facing a massive challenge in pushing up production from around 76,000 vehicles last year to a goal of 1m in 2020.
Mr Musk predicted his company would open a clear lead over the rest of the industry with the launch of the Model Y, its next planned vehicle, a crossover sport utility vehicle aimed at the same price point as the E. That vehicle would be made in a new factory that represents “a step change” from anything other carmakers have built, he said.